Airline profits to climb as passenger numbers go sky high at 3bn-plus

 

Europe’s airlines are expected to double their profits this year, while carriers round the world will together post profits of  $12.7 billion (£8.3 billion) — more than  $2 billion higher than previously expected, the industry body predicted today.

The International Air Transport Association upgraded its global profit outlook for the industry from $10.6 billion forecast in March, thanks to larger planes, lower fuel prices and the number of passengers rising above three billion for the first time.

In Europe, annual airline profit has been upgraded from $800 million to $1.6 billion, partly thanks to consolidation on the North Atlantic market, where Virgin is starting to code-share with Delta, and British Airways, owned by International Airlines Group, code-shares with American Airlines.

But IATA warned that European airlines were hostage to the region’s unfolding economic crisis.

“Improvements in the eurozone crisis have stalled in recent months, giving rise to fears of a third false dawn,” it said. “In 2011 and 2012, improving trends dissipated when the crisis took unexpected turns for the worse.”

Tony Tyler, chief executive of IATA, also warned that airlines’ margins remain weak. On revenues that are set to total $711 billion this year, the net profit margin is expected to be 1.8 per cent.

“This is a very tough business,” Tyler said. “On average, airlines will earn about $4 for every passenger carried — less than the cost of a sandwich in most places.”

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